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Do you mean it's basically impossible to precisely calculate? If so, yes. But I believe (and many smart folks who have made a lot of money doing so also believe
by danielmarkbruce 5y ago
Do you mean it's basically impossible to precisely calculate? If so, yes. But I believe (and many smart folks who have made a lot of money doing so also believe) it's possible to accurately give a range. Like, company X is worth between $900 million and $1.1 billion.
- baq 5y agoI mean that even such a range doesn’t really say anything because it doesn’t describe what is included in the valuation. Is it nav, npv or are some future cash flows also included? It’s up to the person giving the valuation to describe.
- danielmarkbruce 5y agoIn practically every case when talking about a publicly listed company, such a number is referring to a fully diluted market capitalization based on the net present value of the cashflows which would be received by the common stock holders. The cash could be dividends, it could be buybacks, they could be a result of regular cash coming out of the business, or a sale of assets - it doesn't matter. There really is no confusion amongst people in the industry.If they are talking about something different, they will explicitly say so (the easy example is Enterprise Value, or EV).